Labor’s biggest union backer is calling for Rachel Reeves to impose a wealth tax on the richest 1% to give public sector workers a pay rise.
Ahead of the Chancellor’s first Budget in October, Unite has tabled a motion to the Trades Union Congress to raise billions of dollars in tax money for public services.
Unite, which has given Labour around £2m in the run-up to the election, says such a tax would generate £25bn a year and could be used to “give public sector workers a 10% pay rise”.
The Accord union, which represents workers in banks and the financial services sector, called on Ms Reeves to bring capital gains tax into line with income tax. It also called on her to close inheritance tax loopholes and expand National Insurance.
Another union group has called for a widespread programme of nationalisation. Unison, PCS, RMT and Aslef have called on the Chancellor to move energy, water, transport, post, broadband, education, health and social care into public ownership. Shop workers’ union Usdaw has called on him to lift the two-child benefit limit.
The proposals will be discussed at the TUC next month.
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Former Conservative prime minister Kwasi Kwarteng predicted on Thursday that Labor would introduce a wealth tax by the next election to pay for public sector wage increases.
He told GB News: “I think there will be more and higher wage deals that will be paid for by higher taxes and that’s what the Treasury has made clear and implied.”
“And my question is, what taxes will they impose? They will probably try to tax the rich. So I strongly suspect that there will be some sort of mansion tax, a wealth tax, before the end of Parliament.”
Reeves opened the door to tax rises by accusing the Conservative Party of leaving a £22bn black hole in the public finances.
He told MPs last month it was time to “be honest with the public” about the difficult decisions that needed to be made, including cuts to public spending.
It is thought he could try to get his money back by closing inheritance tax loopholes and bringing capital gains tax rates into line with income tax rates.
The call for a wealth tax on the richest 1% has received support from former Labour leader Jeremy Corbyn, who is now an independent MP.
“Retrenchment has destroyed our societies and pushed millions of people into poverty. Repeating this failed economic experiment would be a catastrophic mistake,” he wrote on X on Thursday.
“Stop cutting our services and tax the rich instead,” he said, referring to an Oxfam report claiming that the richest 1% in the country own more wealth than 70% of the British population.
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The Unite motion says: “Congress believes that simply waiting for growth to make money will not deliver the investment needed to fix our broken economy and restore living standards for public sector workers. Different choices will need to be made, including on taxation, more borrowing and collective bargaining.
“Congress says a wealth tax on the richest 1% could restore local government funding to pre-austerity levels, or give public sector workers a 10% pay rise and fill existing NHS vacancies. Congress wants a wealth tax on the richest 1% to raise £25 billion a year for our public services and the NHS.”
The union also demanded the return of collective bargaining agreements to increase workers’ wages and automatic recognition of the right to union recognition.
The RMT motion stated that Labor could not rely on the hope of economic growth to fund improvements in public services.
“There is an urgent need for Labour to deliver a significant real increase in public spending and investment, both as a matter of urgency and as part of a long-term economic strategy for sustainable growth,” it said.
“Congress therefore agrees that the General Council must urgently agree on a high-profile and constructive public campaign to make the case strongly for a more radical, progressive and credible economic strategy for national renewal.
“This campaign will include making the case for reforms to unnecessarily restrictive and arbitrary fiscal rules, reforms to taxation, the introduction of wealth taxes and redistribution of wealth. This campaign will be launched as soon as possible to influence the next and future Budgets and to lobby MPs and Cabinet.”
In its motion, Deal called for a “fair” tax system, saying: “Congress demands that the TUC make the case for a more progressive tax system, including equalising the capital gains tax in line with the income tax, so that all income, whether from wealth or business, is taxed equally.”
Other changes advocated by Accord include closing inheritance tax loopholes, such as allowances for agricultural and commercial land, and special treatment for alternative investment market shares.
The union also demanded that National Insurance should be applied to investment income so that all income is taxed at the same level.
Usdaw’s motion calls for an end to the “two-child limit”, which removes certain benefits for third and subsequent children. It said: “Congress calls on the Labour Government to positively promote properly funded social security and employment reform as an integral part of a functioning modern society.
“As a first step, Congress calls on the government to urgently convene a task force to set a timeframe for enacting measures to address the injustices and flaws in the current system… The task force should commit to lifting the five-week waiting period and eliminating the two-child limit.”